Etching Ethics into Retail Pricing
Not long ago an association director asked me how an association should address the dealer practice of selling window identification to retail customers for a price that ranges from $695 to $1,295. Although it is unlawful for an industry association to be involved with retail pricing, it is vital that all of us associated with the industry advocate ethical practices in the pricing and presentation of products.
What is ethical about selling the same product, with the same benefits, to different customers at different prices, with a retail price variance of as much as twelve hundred dollars for a product that the police department provides for free?
The negative press alone should be enough for the marketplace to demand a change. If we are going to create loyal customers, we need to create ethical practices for pricing, selling and servicing. I believe that it is both possible and practical to do this in a way that gives the customer fair value and allows the dealership to make a fair profit on all their products.
Standardized Pricing
Many of you reading this article live and do business in a small community. Your customers are your acquaintances and neighbors and will at some point compare both the products they bought and the prices they paid at your dealership.
In today’s price-sensitive market, dealership senior management would do well to establish an in-house M.S.R.P. for all F&I products and services. When the dealership sets a maximum selling price, everyone understands that while they can sell the products for less, they should never exceed the dealership’s retail sales price.
Standardized pricing throughout the dealership reinforces product credibility and the dealer’s professional reputation. For example, a customer may not purchase window identification when they buy the vehicle, but may choose to purchase this same product when they later bring in their vehicle for service. If the price quote from Service matches the price previously quoted in F&I, the customer’s confidence in the product’s efficacy and the dealership’s integrity are reinforced.
Reliable Products
Do all of your products perform as presented? Last year I witnessed the correct way to apply protective coating to the exterior of a white rental car I was using. The demonstrator applied the coating, sprayed black paint onto the hood, let it dry and removed the paint with a renewer. He then sprayed more black paint onto the hood, set fire to the wet paint and calmly used an air hose to extinguish the flames. Then the demonstrator confidently applied renewer to the hood surface, counted to 12, and with a rolled up towel removed ALL of the black paint plus the over spray. The white paint of the rental car was intact and the finish looked better than it did when I drove it away from the airport. Can your protective coating pass the fire test?
Reliable products and standardized pricing within a dealership can go a long way toward ensuring ethical sales practices in F&I.
Dealer Marketing Magazine, September 2003, p. 14